As crypto adoption ramped up in the early 2020s, blockchain became a trending topic in the news. In 2023, AI stole the tech spotlight. What’s next? We are seeing another tech revolution brewing with quantum computing, which will have a more significant impact than blockchain and AI.
Updates from the world of quantum computing started making media ripples in late 2023. On its own, quantum computing will change the entire classic computing infrastructure as we know it. Combined with AI, it will have an impact that most of us can’t even imagine yet.
What does this mean for blockchain, a technology that operates squarely on a classical computing foundation? Before answering that, we need a refresher on quantum computing and why it matters.
What is Quantum Mechanics and Computing?
Quantum mechanics is a fundamental theory in physics that describes the behavior of matter and energy at the atomic and subatomic levels.
Over the last 100 years, humans have gained a reliable understanding of how the world works from the observable to the atomic level. However, matter behaves differently at the sub-atomic level, where particles are smaller than atoms.
Quantum computing uses quantum mechanics to perform operations on data. Without quantum computing, we have no reliable way of looking at what’s happening at the subatomic (quantum) level.
Given that the natural world, from space to nature to the human body, fundamentally relies on what’s happening at the quantum level, not having insight into quantum processes is a huge blind spot in humanity’s current knowledge base.
How Quantum Computing Differs From Classical Computing
Quantum computing fundamentally differs from classical computing. Classic computing is binary, relying on bits in one of two states (0 or 1).
Quantum bits, or qubits, can not only exist in multiple states, but they can do so simultaneously. This duality exponentially increases the amount of information that the system can analyze. Quantum computers can analyze vast amounts of data much faster than existing systems.
Physicist Dr. Michio Kaku uses an example of a mouse going through a maze to get a piece of cheese on the other end to understand the fundamental difference between the performance of quantum computers vs. classic computers.
As you know, a maze has several options for the mouse, but only one is the correct path leading to the cheese. The classical computing system would map each option individually, eventually arriving at the path leading to the cheese.
A quantum computer maps all the possibilities simultaneously, instantly using the correct path. This interactive article from the Financial Times also does a fantastic job of exploring the differences between classic and quantum computing.
Key Principles of Quantum Computing
Quantum mechanics is very technical. Most people don’t understand the math behind the principles, and that’s OK. You don’t have to know how everything works to grasp the basic principles.
Qubits: Unlike classical bits, qubits can be in a state of 0, 1, or any quantum superposition of these states. This type allows quantum computers to process vast amounts of information simultaneously, exponentially enhancing their potential computing power.
Superposition: This principle enables qubits to exist in multiple states simultaneously, unlike classical bits that are either 0 or 1. The superposition principle is why quantum computers can perform many calculations simultaneously, offering potentially enormous speed advantages for specific problems.
Entanglement: Quantum entanglement is a phenomenon where qubits become interconnected, and the state of one qubit can depend on the state of another, no matter how far they are separated. This interconnection matters because it allows for swift information processing and is central to the power of quantum computing.
Quantum Algorithms: Quantum computers use different algorithms to exploit superposition and entanglement.
Applications: Quantum computing has the potential to revolutionize various fields by handling complex problems that are currently intractable for classical computers. This includes cryptography, drug discovery, optimizing large systems like supply chains, financial modeling, and solving complex scientific problems.
Benefits and Threats of Quantum Computing
One significant benefit of quantum computing is solving complex problems faster than traditional computers. The graphic below illustrates one estimate of how much faster quantum computing will be vs. classic computing.
For example, some fields of medical research have hit a wall with classic computers. Quantum computing will provide new insights into cancer research that scientists cannot achieve with classical computing.
In the climate change arena, it can accelerate renewable energy development, improve weather prediction models, and help reduce emissions in the car and shipping industries.
However, quantum computing also brings notable threats, especially in cybersecurity. Experts say that quantum computers could break any current cryptographic protocols, rendering much of today’s encryption obsolete and posing a significant risk to data security across various sectors, including defense, finance, government, and healthcare.
That brings us to the question of quantum computing in blockchain’s future. Or rather, does blockchain have a place in a future dominated by quantum computing?
Quantum Computing and Blockchain
Due to blockchain’s reliance on cryptography, quantum computing poses a potential challenge to blockchain security. Here’s an overview of how quantum computing could affect blockchain:
The security of current blockchain technology largely depends on cryptographic algorithms that are computationally difficult for classical computers to break.
Quantum computers performing complex calculations more efficiently than classical computers could potentially break these cryptographic algorithms.
Impact on Bitcoin and Other Cryptocurrencies
Quantum computing could specifically threaten Proof of Work (PoW) cryptocurrencies like Bitcoin. Quantum computers could solve PoW problems much faster and disrupt crypto-mining economics.
Users’ key security is at risk, too. Quantum computers could theoretically derive a user’s private key from their public key.
Blockchain Progress On Quantum-Resistant Algorithms and Cryptography
The threat posed by quantum computing has led to a growing interest in the blockchain community in developing quantum-resistant or post-quantum cryptographic algorithms that are secure against quantum attacks. These include improved cryptographic techniques, underlying protocols, and network structure changes.
The National Institute of Standards and Technology (NIST) is working on standardizing post-quantum cryptography, which will guide the adoption of quantum-resistant cryptographic algorithms in blockchain and other industries. Some other efforts are in the works:
- Quantum Resistant Ledger Foundation: Developing and promoting quantum-resistant standards. NIST has also recommended Stateful hash-based signature schemes, including XMSS, which Quantum Resistant Ledger uses.
- Quantum Blockchain Alliance: Working on developing and promoting quantum-resistant standards.
- Inter-American Development Bank, the IDB Lab, LACChain, Cambridge Quantum Computing (CQC), and Tecnológico de Monterrey: Working to identify and eliminate quantum threats in blockchain networks.
- IOTA: Popular for implementing some hash-based signatures.
- HyperCash (HC): A quantum-resistant cryptocurrency.
While quantum computing presents potential risks to blockchain security, particularly regarding cryptographic algorithms, the blockchain community is aware of these challenges and is working on solutions. The development of quantum-resistant technologies will ensure blockchain systems’ long-term security and viability in the quantum computing era.
Quantum computing progress is at the point where it’s not a matter of if but when the technology will move out of research labs and into the mainstream. But how long will it take? Researchers have been saying we are decades away from workable quantum computers for the past few years.
Current quantum computers are delicate and compromised by a range of environmental factors. They require an operating temperature as close to absolute zero as possible. A simple old-fashioned power outage can cause a quantum meltdown. The Earth’s magnetic field and local radiation also increase the error rate in quantum computer calculations.
However, as we’ve seen with AI, technology breakthroughs are dynamic, and their timeline tends to accelerate. In June 2023, a paper by IBM and UC Berkeley researchers demonstrated that even the currently flawed quantum computers can provide relevant benefits beyond today’s classic computers.
Except for in the movies, your crypto is likely safe from a quantum hack in the foreseeable future.
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Disclaimer: This material has been prepared for informational purposes only and is not intended to provide tax, legal, or financial advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.